Posted on 02/25/2008 5:08:27 AM PST by TigerLikesRooster
America's grain stocks running short
By Robert Pore robert.pore@theindependent.com
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Global demand for grain and oilseeds is at record levels, causing the nation's grain stocks to reach critically low levels, according to Purdue University agricultural economist Chris Hurt.
With a weak U.S. dollar and global demand so high, foreign buyers are outbidding domestic buyers for American grain, Hurt said.
"Food consumers worldwide are going to have to pay more," Hurt said. "We ended 2007 with our monthly inflation rate on food nearly 5 percent higher. I think we'll see times in 2008 where the food inflation rate might be as much as 6 percent."
Increasing food costs will ignite the debate on food security this year, Hurt said.
"We'll have discussions about whether we should allow the foreign sector to buy our food," he said. "Is food a strategic item that we need to keep in our country?"
The USDA recently released a revised forecast for agricultural exports, predicting a record of $101 billion for fiscal year 2008.
According to the U.S. Grains Council, a significant increase in feed grain exports buoyed the forecasts. Specifically, the forecast for coarse grain exports is raised to 70 million tons, up 2 million tons since November. Corn and sorghum exports are up $2.4 billion from November. Coarse grain exports are forecast at $14.1 billion, $4.3 billion above last year's level.
Hurt said the 2007 U.S. wheat crop is virtually sold out, while domestic soybean stocks soon will fall below a 20-day supply. Corn inventories are stronger, but with demand from export markets, the livestock industry and ethanol plants, supplies also could be just as scarce for the 2008 crop.
More than 70 percent of Nebraska corn crop this year could go to ethanol production.
But what concerns Hurt the most is weather. Adverse weather could trim crop yields this year and cause crop prices to skyrocket even further.
Last year, Nebraska had a record corn crop of nearly 1.5 billion bushels. But rainfall was exceptional last year, especially during the growing season, which helped increase crop yields.
He said recent cash prices for wheat, soybeans and corn are up dramatically from two years ago. Wheat prices have been near $10 a bushel, more than $6 a bushel higher. Cash prices for soybeans are about $13 a bushel, up more than $7 a bushel. Corn is pricing at almost $5 a bushel, an increase of greater than $3 a bushel.
No doubt, but you haven’t the insight of what makes a farmer a farmer. That's where the real difference and motivation is.
The recent jump in prices has whetted the appetites of farmers who have never had the opportunity to do what they have yearned to do since they were little boys, grow the biggest damn crop that piece of ground has ever produced.
There are but a handful of farmers who know what it’s like to farm without some government official telling them they are raising too big of a crop.
98% of farmers today have only farmed under the thumb of the government. Those chains may be falling away, and the results will be crops the likes of which the world has never seen before.
We have never had fuel mandates, especially the huge size of these mandates.
We have had similar fuel mandates since the early 80’s. At that time the mandate was MTBE or Ethanol. Most companies, unsurprisingly chose their own MTBE over ethanol.
. The increase in future corn production is heavily driven by ethanol mandates and subsidies.
The subsidies are useless at this point, there isn’t enough money in subsidies for farmers to use them.
I find the ethanol mandates and subsidies ironic. I have never read anything that indicates corn-based ethanol will ever be a viable alternative to petroleum.
They will lead to other crops that will produce ethanol more efficiently than corn does, or strains of corn will be engineered to produce ethanol more efficiently, or corn will be grown more efficiently than it currently is. In the short term, my bet is on the latter.
Although we’ve seen big increases in yields, the increases in the next years will dwarf everything that’s happened so far. We are commonly seeing 200+ bushel corn today. That was rare only 15 years ago. Soon even that will be history. Farmers, feeling their freedom will be blowing by 300 bushels in no time (It’s already occurred, it just isn’t common) and 400 bushels is only a short time behind that.
Demands by farmers for genetically engineered corn with a focus on ethanol production has been heard by the seed companies, and corn with better ethanol yields is already entering the system.
...which, of course, is how yuppies view folks who work for a living.
I don’t know if this is it but I’ve always known there would come a day when America would have to pay the Piper when it comes to food and food security.
Even with what most conservatives called “Welfare for Farmers”, farmers have been retiring with no-one to take their place, going broke or just quitting before they went broke.
Even if we stop the corn for ethanol and take some farms out of CRP we are going to have shortages. Where are we going to find the farmers to farm the land? I don’t think there is any way to train young people to farm much less get them the financing to do it.
But even without shortages food prices are rising if only because the middlemen are paying higher fuel costs.
Farmers can’t win can they? If they are busting their arses and collecting the pittance you all call “welfare” while losing their butts, everyone hates them, but just let reality hit the common man and the farmer see some hope down the road and everybody starts whining. Americans haven’t paid realistic prices for food and fiber for a long time.
I'm interested in what an actual farmer thinks rather than all the talking heads on TV. Some say it's trade agreements, and other say it's Chinese internal politics. Many people in Ohio seem to think NAFTA is a deal with the devil. Trade agreements have brought us $29 DVD players, but have also opened markets overseas. I have to also think it makes it possible for them to need more food and buy Chevy's and Harley's. We may have trouble over here, but it seems it might be worse if we couldn't sell overseas.
It seems to be an argument over the chicken or the egg came first.
I tell you what, farmers won’t like it at all, we’ve (and most farmers) have been operating on the margins for years and this looks wonderful to me. We’ve been waiting for an upturn for years, we’ve remortgaged countless times to keep going and you get your way and if we can’t make the Cash Flow, flow, it would be better not to farm at all.
I don’t think we stand alone in this. Farmers could choose to cut back or not farm at all, I know a lot who have already made this decision. So beware of what you advocate and ask for. It is past time for the price of food to get more realistic.
First of all the acreage that isn’t being farmed is marginal land, that is why it is in the CRP program in the first place and second, who are you going to get to farm them? Less than 5% of farmers are under 35 and the majority of them are retirement age with no-one to take their place.
LOL, we’re farmers and we’re going to have a full garden this year for the first time in a long time. For the last few years I figured food was so cheap why put the expense and work into gardening and canning. We’re feeding a couple of calves too and you can bet we’ll be buying the grandkids 4H animals if they don’t make the sale this year.
I can’t answer your question, but I have a call into to someone who may know. I’ll let you know.
I sold out in 1986 and moved to CO, but have maintained my interest in farming.
Hope that grandkids raise some prize-winning critters! I miss those days.
“There are but a handful of farmers who know what it’s like to farm without some government official telling them they are raising too big of a crop.’
The demand for the large crop is primarily driven by ethanol mandates. Remove the mandates and the demand will fall substantially. Any corn farmer who thinks he is farming without government intervention is deluded.
“We have had similar fuel mandates since the early 80’s. At that time the mandate was MTBE or Ethanol. Most companies, unsurprisingly chose their own MTBE over ethanol.”
The oxyenate mandates are dwarfed by the mandates in the 2007 energy act. There is no comparison. Otherwise, why have the new mandates in the bill?
“The subsidies are useless at this point, there isn’t enough money in subsidies for farmers to use them.”
I am talking about the ethanol subsidies and mandates not farm support payments. The ethanol subsidy (0.51 per gallon) and mandated usage of ethanol are enormous.
“Farmers, feeling their freedom will be blowing by 300 bushels in no time (It’s already occurred, it just isn’t common) and 400 bushels is only a short time behind that.”
Farmers are not feeling their freedom. They are feeling the wind of government mandates and subsidies for ethanol. Your freedom is everyone else’s yoke. The public does not want corn-based ethanol.
“Demands by farmers for genetically engineered corn with a focus on ethanol production has been heard by the seed companies, and corn with better ethanol yields is already entering the system.”
Unfortunately, the demands are artificially driven. The government could do the same for any good or service. Industry would respond to the mandated usage by increasing production levels to satisfy the mandate.
You need to realize that although the farm states are relishing in this government largesse, the rest of the country is suffering. If that makes you feel good, perhaps you can identify other goods or services that the government should mandate. Corn based ethanol will only lead to high fuel prices relative to the rest of the world. In addition, world food prices are being driven higher by mandates to grow fuel.
Let the rest of the world starve while the corn belt celebrates! Let’s see what happens to these fantastik yields when the next major drought hits the corn belt.
Let the rest of the world starve while the corn belt celebrates!
I've said much the same many a time on FR.
We are such a wealthy nation, and have such a wealth of food that we can even provide as much 'organic' food as people want to buy, even though it's terribly wasteful, taking twice the food producing resources to produce the same amount quantity of low quality food.
We are so wealthy, we can also 'burn' our food to fuel our SUV's.
There is a reason for that wealth. Rather than go into detail, I'll just sum it up, our Forefathers were wise enough to use the incentives that capitalism provides to motivate everyone to produce as much as they can.
Nowhere is that more true than in farming.
Yet, for all the examples we have shown the world, for all the 'missionaries' we have sent out to teach others how it's done, they have chosen to continue to use methods that keep them one crop away from starvation.
They have chosen to behave in a stupid, irresponsible fashion with one of the most basic of human needs, food.
Who are we to interfere with their choice?
Let'm starve.
Meanwhile, let's celebrate by eating our 'organic' foods (OK, truth be told, I'll stick with my 'inorganic' steaks) and drive our SUVs to the station and fill up with food we've 'burnt'.
There is a price for ignorance and stupidity, sometimes that price is starvation.
Right. Consumers benefit by paying much higher taxes. I'm glad you recognize that consumers are net losers in that equation.
Sounds like a good conservative.
Nevertheless, we were both enrolled.
Turned into a socialist by "free" money.
Keep ignoring the tax dollars we pay for those "unrealistic" prices.
Corn growing requires a tremendous amount of water....just when we seem to be having shortages.
Pretty much says it all.
Well, with a Bush in office anyway. Compassionate conservative-- you bet.
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